Publicis Groupe 'in Merger Talks' with Omnicom

Advertising giants Paris-based Publicis Groupe and the US's Omnicom Group are reportedly in late-stage talks over a possible merger.

Bloomberg quoted a source familiar with the matter as saying that the deal would pave the way for a merger of equals.

If the deal goes through, the joint venture would be the largest advertising company in the world, dislodging the London-based WPP from the number one position.

The move would expand the geographical reach of both companies, helping them negotiate better advertising rates for media placements on the internet, television and print for its clients.

The proposed deal would form a group worth $30bn (€22.6bn, £19.5bn).

Omnicom's dominant presence in the US and Publicis's recent aggressive expansion in emerging markets such as China are likely to bring additional dividends.

A combination has "significant industrial logic to it. It may contribute to a reduced degree of competition when services are priced for clients," Bloomberg quoted Brian Wieser, an analyst with Pivotal Research Group in Los Angeles, as saying.

The company posted a 15% increase in first-half profit supported by growth in the US and revenue from digital activities.

The company, which owns Leo Burnett and Saatchi & Saatchi, posted improved net income this year of €314m, with revenue increasing to €3.35bn, way ahead of analysts' forecasts.

Omnicom, led by CEO John Wren, reported a 6.9% increase in net income per common share in the second quarter while its net income climbed 2.4% to $289.5m in the second quarter from $282.7m in the second quarter of the previous year.

The company, which was founded in 1986, generated more than $14bn in revenues last year through advertising brands such as BBDO Worldwide.

The New York-based Omnicom climbed 1.3% on 26 July 2013 to close at $65.11, a market capitalisation of $16.7bn. Publicis advanced by 1.5% to touch €59.35 in Paris, a market value of €12.5bn.

According to ZenithOptimedia, a research firm which is part of Publicis, advertising spending could climb 5% next year to $542.9bn worldwide.